Lord of strategy: how Gus O'Donnell achieved visible leadership

24 February 2015 -

The high-profile Peer tells us how his informal management style – and willingness to challenge accepted wisdom – led him to the top of the Civil Service

Matt Ross

Micromanagement rarely reaches the top. “I’ve often been accused in my appraisals of not being prepared to get into great detail,” admits Lord O’Donnell, the most powerful and high-profile cabinet secretary of recent times. “There are times as a manager when you need to understand all the detail, but a lot of the time it’s important to be strategic; to stay above it; to think about the big picture; and not be deterred by one day’s headlines. You’ve got to think for the long term.”

Having served in the heart of Whitehall for a generation, Gus O’Donnell is well-qualified to talk about long-term strategy and SMART objectives (ie, Specific, Measurable, Assignable, Realistic and Time-related goals). Those appraising him have included three prime ministers, for he spent six years as the UK’s cabinet secretary: a role that involved advising the prime minister, supporting cabinet and overseeing a 400,000-strong central government workforce. Civil service leaders, forever caught between the constantly changing demands of the public, other Whitehall departments, their own ministers and the UK’s hyperactive media, sometimes struggle to maintain that focus on the long term. Yet the approach plainly suited O’Donnell: “You’ve got to have a clear strategy, and a plan to deliver that. You’ve got to engage people in how you’re going to do it – then just follow the metrics, like all good managers,” he says. “And the key to all of that is getting the right people around you. If you choose the right people and delegate sensibly then, boy, does that make your life easier!”

A civil service economist for nearly 20 years, O’Donnell knows how to follow a metric – but that only paints half the picture, for among the smooth Whitehall operators and backroom deal-makers who still dominate the top echelons of the civil service, O’Donnell made the job his own with a rare commitment to visible leadership. “It’s really easy to inspire our staff, because there’s this great moral purpose,” he says. “The public sector ethos motivates people; all we need to do is give them the tools, skills and expertise.”

Determined to strengthen the civil service’s sense of social mission, corporate identity and common purpose, O’Donnell worked to boost collaboration between departments, improve communication from the centre and strengthen leaders’ connections with frontline staff. It says something about his informal style that, despite his knighthood and the media’s tendency to call him “GOD” – after his initials – many civil servants addressed him simply as “Gus”.

Public sector saviour

In part, O’Donnell’s atypically informal approach probably reflects his background. Many civil service highflyers have come straight from private schools and Oxbridge into the “fast stream” graduate training programme, but O’Donnell was born into an Irish family in Battersea, attended a state Catholic school and became the first in his family to go to university, before spending four years lecturing at Glasgow University. “When I joined the Treasury, there were times when I felt like an outsider,” he recalls, his native Londoner’s accent still unmistakable. “I missed out on the bonding together of fast streamers, and I felt that was a cost. On the other hand, I added a bit of diversity to the mix – and I think that was a strength overall.”

The Treasury provides an excellent view across Whitehall, and there O’Donnell began grappling with some of government’s unique problems. “Imagine the difficulties of getting an army back out of Afghanistan,” he says: it’s a huge logistical exercise, involving tens of thousands of staff and hundreds of millions of pounds. What’s more, civil servants must operate in an environment where their political bosses can be abruptly switched. “When ministers change because of reshuffles or changes of administration, the ultimate decision-maker is moving on. That’s a very different world from the private sector,” O’Donnell adds. Then he digs around for an analogy from the private sector: “I guess it must be a bit like a hostile takeover.”

New ministers often have little idea of how government operates – and business experience is of limited value, argues O’Donnell: “People have tried to say that the analogy is that the permanent secretary is the chief executive and the minister is the chairman, but in my view that doesn’t work at all,” he says. “You have to understand that it’s a completely different form of organisation.” So neophyte ministers arrive without any real understanding of the job – and, as O’Donnell says, “we wouldn’t suddenly parachute someone into a big civil service job unless they’d done a similar job before.” In his view, “we need to teach people these skills long before they become ministers: if they’re coming through the door on day one and it’s all completely new to them – well, that’s not how any proper organisation should work, is it?”

Though O’Donnell doesn’t say so, the lack of government experience among coalition ministers may explain some of the recent tensions between politicians and civil servants. After all, ministers who expect civil servants to unquestioningly implement all their ideas are likely to be disappointed: “It’s our job to be challenging,” says O’Donnell. “Ministers are there to set the aims, and it’s our job to say: ‘There are lots of ways to achieve that objective, minister. You’ve suggested one, but if you go down that route will you be criticised very severely when it doesn’t deliver what you really want? Could we do something even better?’”

Civil servants have a duty to make sure that policies are workable, O’Donnell explains – and that involves resisting both poor ideas and the pressure to act on every new media furore. “There’s a great risk that with the pace of the media increasing, we bring the pace of policymaking up to the same speed – and that would be wrong,” he says; the pace must be one “which works in a very fast-moving, dynamic world, but which comes to the right decisions.”

Divine vision

As O’Donnell rose higher up the Whitehall tree, he became increasingly involved in what is perhaps the trickiest form of cross-boundary work in government: the lines between officials and ministers can be deep, but those between different departments often run deeper. As in any organisation, he says, in government there are problems getting “individual parts to act in the interests of the whole. You can try to get the incentive structures in the right place so that these two things align, but there will always be times when you need people to sacrifice their specific areas for the greater good – and that’s when you can see the next generation of leaders: real leaders need strategic vision.”

In O’Donnell’s case, his strategic vision was of a civil service characterised by his “four Ps”: he tried to foster pride and passion in the workforce, and to use that energy to increase the civil service’s pace and professionalism. “We had let our systems become too inflexible,” he explains. “We needed to understand that the world is changing quite radically, and people now expect their public services to be delivered as e.ciently as their private services. We needed to embrace new technology, and to develop new skills.”

In particular, government needs to improve the way it works with private contractors. As O’Donnell ruefully acknowledges, the public sector too often gets a poor deal. Suppliers’ negotiators are generally “very, very good,” he says. “On the public side we have some very good people, but they’re not paid anything like as much and some of the best are – surprise, surprise – attracted away to the private sector. So in some cases we feel a bit outgunned.”

With public sector pay rises capped at 1% and big salaries requiring Treasury sign-off, O’Donnell fears the best civil servants will always be poached by contractors. “There is a public sector ethos, but when the pay gap is too big it becomes unsustainable,” he says. “We can grow our own people, but the risk is that we’ll lose them.”

The alternative is to use consultants; and while the Cabinet O.ce has clamped down on consultancy spending, O’Donnell argues that without them “we are going to risk not having the professionalism we need for these big contracts. If we’ve got a pay constraint which means that we can never get the right skilled people, it may be that we need to accept the fact that there are certain areas where we’ll be using consultants more routinely.”

Having retired from the civil service, O’Donnell has now become a consultant himself – though not to government or its suppliers. He has, he says, “gone plural”, with work for an economics consultancy and a Canadian bank; visiting professorships at the London School of Economics and Political Science and University College London, where he pursues his interest in the public sector’s use of behavioural economics; and, when he can fit it in, contributions in the House of Lords. Meanwhile, he’s volunteering for the charity Pro Bono Economics, and “trying to work out how I can best contribute to helping developing countries improve their governance”; he’s already working with one country, as yet unnamed.

O’Donnell’s philosophy

In any remaining moments, he indulges his passions for Manchester United, tennis and travel. And there’s one other pursuit he particularly enjoys: an interest that both marks him out from the classic, risk-averse civil servant, and reveals something of the competitive steel that pushed this Battersea boy right to the top of Britain’s government.

“I’m interested in poker, and games like perudo,” he explains, “because even if you’re smarter than everybody else in being able to work out conditional probabilities and things like that, ultimately the people who win those games are the ones who are better at reading people. It’s the psychology: getting the probabilities right doesn’t mean that you’re going to be the best player, because people bluff and you’ve got to read their body language.”

In management, concludes O’Donnell, “you’re always gambling, in the sense that you’re making decisions under conditions of uncertainty.” And good leaders – like good poker players – must not only get the metrics right, but also understand the very fallible humans on whom their success will depend. “It’s that mix,” he says. “Otherwise, the best mathematicians in the world would be winning all the poker games – and if you look around, they’re not.”

Gus’ Four Ps

Pride

Passion

Pace

Professionalism

Milestones

1975 Joins Political Economy Department, University of Glasgow, as a lecturer

1979 Recruited as a Treasury economist

1990 Becomes press secretary to Prime Minister John Major

1997 Made UK’s executive director to the IMF and the World Bank

2002 Promoted to permanent secretary of the Treasury 2005 Appointed cabinet secretary and head of the civil service

2011 Retires from civil service and made a life peer as Baron O’Donnell of Clapham in the London Borough of Wandsworth

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